Posted on 05/05/2004 4:30:23 PM PDT by snopercod
TORONTO — Lumber and plywood prices have shot up so rapidly in recent months that they are tearing the profit out of home construction for some builders and threatening to dent the booming housing market.
Paul Kuszmaul, president of Kuszmaul Builders in Champion, Ohio, said the run-up in prices had left him unsure whether to push ahead with a condominium development in the Mahoning Valley, between Pittsburgh and Cleveland.
Since January, he said, the cost to build each condo unit in the project had risen $4,000, largely because the price has more than doubled for oriented-strand board, a widely used substitute for plywood made by pressing long wood strips together using adhesives.
The product has been rapidly displacing plywood as a construction material because it is cheaper to make, can be made from the limbs and roots of trees as well as trunks, and is more uniform in quality. Almost three-fifths of all structural wood panels now sold are oriented-strand board, or OSB, compared with a quarter in the early 1990s.
Prices of both OSB and plywood reached records one week last month. According to Random Lengths, a trade publication, 1,000 square feet of -inch OSB sells for $503 in the north-central United States; this time last year, the same amount cost $170. Half-inch four-ply southern pine plywood is up to $523 for 1,000 square feet, from $240 a year ago.
Plywood prices began to rise last year in late May and early June, dropping late in the year, before increasing sharply in January.
Prices of other types of lumber have also risen, although less sharply. And the buoyant metals markets, especially for steel, have also driven up costs.
"It's almost a rocket ship ride," said Jim Enright, general sales manager at Rosboro Lumber, a plywood manufacturer in Springfield, Ore. "The activity level since the beginning of the year has been phenomenal."
The ride has been less exhilarating for buyers. Brian Catalde, president of Paragon Communities, a builder in Playa del Rey, Calif., said that the cost of the lumber used in building a typical entry-level home had roughly doubled in 18 months, to $24,000.
A handful of manufacturers dominate the OSB market. Five companies account for three-quarters of all sales in North America. They are Louisiana Pacific, Weyerhaeuser and Georgia-Pacific in the United States, and Nexfor and Grant Forest Products in Canada.
One reason for the price surge is that production of the boards has not grown fast enough to make up for the loss of plywood, because of the closing of older plants.
Thanks for reminding me. There are a couple of older threads on this that need to be revisited:
U.S. Tariff Put on Lumber From Canada Saturday, August 11, 2001.
U.S. Puts Tariff on Canadian Lumber Amid Allegations of Unfair Subsidies, March 22, 2002.
U.S.-CANADA PARTNERSHIP FOR GROWTH WELCOMES NAFTA RULING, RENEWS CALL FOR LUMBER TARIFF SOLUTION
WASHINGTON, DC – April 30, 2004 – The U.S.-Canada Partnership for Growth today welcomed a North American Free Trade Agreement (NAFTA) Panel report, the latest in a series of rulings which have indicated that the heavy tariffs imposed on Canadian lumber are unwarranted.
“The NAFTA decision gives those who believe in healthy, mutually beneficial, rules-based trading arrangements a signal that we should end this harassment and drop the tariffs,” said Senator William E. Brock, co-chair of the U.S.-Canada Partnership for Growth and former United States Trade Representative. “They are unfair, and cause harm to the biggest trading relationship in the world.”
This is not the first time that legal actions by the U.S. lumber lobby have been rejected.
On May 22, 2002, the U.S. government, through the International Trade Commission (ITC), determined that that the U.S. softwood lumber industry was threatened by reason of alleged subsidized and dumped imports of softwood from Canada. This led to the imposition of countervailing (18.79 percent) and anti-dumping duties (8.43 percent).
On September 5, 2003, the NAFTA Panel ordered the ITC to reconsider its original findings in a manner consistent with U.S. law. On December 15, 2003, the ITC reaffirmed its original position. In yesterday’s report, the Panel found that the ITC determination continues to be unsupported by the evidence. As a result, the Panel has given the ITC 21 days to issue a new determination that is consistent with U.S. law.
Governor Jim Blanchard, co-chair of the U.S.-Canada Partnership for Growth and former U.S. Ambassador to Canada, noted, “the U.S. and Canada enjoy the largest trading relationship in the world, almost $1.3 billion each day. Canada buys more U.S. goods and services than any other country in the world, 37 of the 50 states list Canada as their number one customer, so this relationship matters to America’s self interest. We need to take this ruling seriously, and respond in a way that restores harmony to this important relationship.”
Ever see those machines that lay borders for flower beds and such? I think they are called "Mud Mules" or something. Quick and inexpensive.
BUMP
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